REMINDER: Occupational Superannuation increasing to 11% from 1 July 2023

Following on from previous increases in occupational superannuation to 10% in 2021 and 10.5% in 2022, employers are reminded that the minimum rate for contributions will increase again, to 11%, from 1 July 2023.

The increase from 1 July 2023 is the third of five 0.5% increases programmed over a five-year period, designed to achieve the ultimate 12% from 1 July 2025. The remaining increases to compulsory super contributions are scheduled to occur as follows:

Operative dateScheduled super contribution %
1 July 202311
1 July 202411.5
1 July 2025 onwards12

More super changes in the works

At the beginning of May, Treasurer, Jim Chalmers, announced the Government’s plan to introduce an initiative known as “payday super” which, from 1 July 2026, will require employers to make superannuation contributions every payday, at the same time workers are paid their salary or wages. Treasurer Chalmers identified that Treasury and the ATO will consult closely with industry and stakeholders on these changes in the second half of 2023.

Whilst the proposal is not yet law, the concept has reportedly been well received by unions, super funds and employer groups, though the Council of Small Business Organisations Australia (COSBOA) has expressed concerns. COSBOA labelled the government-provided Small Business Superannuation Clearing House – used by around 130,000 small employers – as ill-equipped to handle payday super, adding a “significant overhaul” would be needed to accommodate more frequent payments. COSBOA will also argue for small businesses with fewer than 15 employees to be able to choose monthly super payments and opt-in for more frequent payments, if desired.

The Government suggests the change will make “payroll management smoother” as businesses will have “fewer liabilities building up on their books” whilst it will be “easier for employees to keep track of their payments, and harder for them to be exploited by disreputable employers”. It is estimated a 25-year-old median income earner could end up about 1.5% better off at retirement, by receiving their super contributions fortnightly instead of quarterly, because more frequent payments allow more time for investment earnings to compound.